Operations Club Edition 1 2019

Table of Contents

Operations Management in new age

Sneak Peak into Companies
What we can learn from KFC’s limited time menu
How the trade war is affecting tech giants
Privatization of Indian Railways and its impact
Learning from failures: The Amazon Way

Summer-ize: Summer Internship Experience

Book Review: The Goal
Understanding Operations
Operations Club Edition 1 2019

Operations Management in new age

predictability and quality while also leaving

The industry is now moving towards room for innovation like automation, quicker
Operations 4.0. But what exactly is this new response and transparency. This
age? What are the implications for combination lays the foundation for supply
companies and managers? chain 4.0. While implementing changes, one
also needs to consider the risk points
We are now experiencing the fourth giant associated with such changes. A structured
leap in terms of technology. The first was assessment of known risks like
with the advent of the steam engine. The transportation availability and costs, raw
second leap was experienced with the onset material costs, competitor activity and
of assembly line production. The third leap unknown risks like weather changes, trade
was marked by robotic process automation wars, policy changes can help reduce the
in factories. The fourth leap is the unpredictability associated with the
streamlining of processes due to digital era implementation of changes. A survey of
coupled with powerful analytics tools and supply-chain experts identified over 50
availability of data. The rise of Operations innovations powering Supply Chain 4.0,
4.0 has a potential to increase the including smart shelves, no-touch order
[2]
productivity of companies by about 15-20% planning, and scheduled maintenance .
[1]
. Let’s have a brief look at the impact of While great supply chains can lead to great
Operations 4.0 on various aspects. financial performance, investing in supply-
chain technologies, people, and partnerships
should be a long-term plan that sustains
Supply chain 4.0: For a successful digital
returns over a period of 5-10 years rather
transformation, a supply chain needs to
than a short term planning of just one year.
retain traditional qualities like reliability,
Operations Club Edition 1 2019

In addition to these core enablers, talent

Procurement: The opportunities opened management, decision making processes,

and a zero-based approach (Redirecting
up by Big Data and powerful analytics are
resources and employees to higher-value
enabling companies to learn more about
areas) for resource allocation are being
their supplier capabilities and customer
considered for the design and
requirements. It is also helping them to
implementation of the new model leading to
improve internal processes. Companies are
Procurement 4.0, the new age of
trying to achieve excellence in six enabling
procurement.
components of the operating model—
processes, digital, organization, capabilities
and culture, governance, and data and
analytics.

speed, higher productivity, and better quality.

Service 4.0: Customers are now Service 4.0 champions can see a range of
performance improvements, including a 60-
expecting interactive and real time services.
percentage-point increase in customer
Technology now enables companies to meet
satisfaction scores and a 40% reduction in
those demands. Some key benefits of
[3]
costs.
Service 4.0 are greater flexibility, faster
Operations Club Edition 1 2019

Source: BCG Analysts

The technologies that are enabling these
changes are Big Data and Analytics, Bionic
Computing, Ubiquitous Connectivity and the
Internet of Things, Cloud Computing,
Cognitive Computing, Smart Devices, Robotic
Process Automation, Virtualization,
Augmented Reality
Industry 4.0: Smart, connected machines,
inexpensive sensors, ubiquitous connectivity,
the ever-declining cost of microprocessors
and storage, and the emergence of cloud-
based storage and software have made a
shift to Industry 4.0. The high-tech industry
has much shorter product life cycles and
more frequent disruptive innovations that are
driven by software as well as hardware. As a
result, industrial-equipment suppliers now
face accelerated innovation cycles, as new
entrants with strong capabilities in software,
data, and analytics join the market and either
replace high-margin services or invent new
markets. As the industry evolves, there will
be more emphasis on the ability to monitor
and control installed equipment and devices,
and new software- and data-enabled
[4]
services.
Operations Club Edition 1 2019

Sneak Peak into some companies

What we can learn from KFC’s limited time menu

KFC has been experimenting with its limited time menu
this year by launching 3 sandwiches (Cheetos chicken,
Beyond Chicken and KFC and Doughnuts Sandwich) which
were available for sale only for a limited amount of time.
These got sold out in a matter of hours.

This is a good way of testing demand for new market

products. In addition to predicting the demand, it gives the
opportunity to test the supply chain which includes finding
potential new suppliers, issues with product delivery and
other issues from operations management perspective. Successful limited-time items can be
considered for permanent inclusion on the menu. However, limited time menu comes with its
own set of challenges. It might be difficult to find suppliers for only a short time. It can also be
problematic to decide on the inventory levels. KFC ran into problems with its Beyond Chicken
sandwich when the demand was way more than expected. Also critical is a successful
execution. New processes need to be introduced and the employees have to be trained.
Hopefully, existing equipment can be used. For a limited-time item, investment in new
equipment can be problematic.
Operations Club Edition 1 2019

How the trade war is affecting tech giants

The trade war between the US and China are making companies revisit their production and
supply chains. This time, it’s Google who is shifting its production process from China to
Vietnam. As per a recent study by the Nikkei
Asian Review, Google has partnered with
Foxconn (who also assembles Apple's
iPhones) to convert an old Nokia factory in
Vietnam to handle the production of its Pixel
phones.

In this case, the low volumes of product make

the shift from China to Vietnam less disruptive
and more feasible. Also, since the new plant
was formerly used for the production of
smartphones itself, the shift should not cause
additional issues in terms of employee
training and quality control issues. This shift
in production unit is a part of a larger trend
where the reports are that Apple was looking
to shift between 15% to 30% of its iPhone production to Vietnam and India to avoid tariffs.
Similarly, the Japanese journal said that personal computer makers HP Inc. and Dell
Technologies are planning to shift up to 30% of their notebook production out of China.
Companies like Microsoft, Nintendo, Sony, and Amazon were also looking to move some of their
game console and smart speaker manufacturing out of the country.

Privatization of Indian Railways and its effects

After the move to privatize 6 airports in India, NITI Aayog has proposed privatization of Indian
railway stations followed by privatization of train operators. Niti Aayog believes that these
projects should be taken up on a Build-Operate-Transfer basis, where stations are developed
Operations Club Edition 1 2019

into economic clusters. The proposal is to unbundle Indian Railways into two independent
organizations: one responsible for the track and infrastructure and another that will manage
operations. Based on similar projects across the world, it has been observed that privatization
opened up to competition, the entry of competitors lowered prices and led to better services.

The privatization will lead to handing over of platform tickets, food courts, parking area and
advertising rights, in lieu of services like escalators, lounges and other modern facilities for
passengers at the platforms. All is not well under the sun, as this move is facing a backlash
from the AIRF. All India Railwaymen’s Federation (AIRF), the largest railway union which is also
the largest employees union in the country, is considering an indefinite strike to protest against
the “indiscriminate” privatization of operating trains, stations, production units, among others.
While the move might create uncertainty and unrest, some are questioning the rationale of
transferring the profitable entities over to private players. In terms of operational efficiencies,
Britain observed a hike in train fares and the government was burdened with the maintenance
costs of railways. Will India be able to tackle these issues in a smarter way? All depends on the
policy makers and the planned operations of the carriers.
Operations Club Edition 1 2019

Learning from failures: The Amazon Way

Dash, an innovative offering by Amazon, that let you order things by simply pressing a button
was a couch potato’s dream. Ran out of tissue papers? Install a button in your kitchen and press
it every time you run out of it. Amazon would deliver the product in a day or two. Amazon was
quick enough to realize it’s failure and ended production of Dash this year. Some courts even
ruled ordering by Dash as illegal as the users could not view product information before buying
those. As for the users, with the growing use of smart speakers like Echo and Google Home,
making orders via voice commands made more sense. We often see the success of giants like
Amazon and Google but are blind to see the failures that they go through before they find that
right ‘blockbuster’ product. Dash was one such product. Would Amazon Wand make it big or
end up like Dash? Let’s wait to find out.

In an economy where we purchase in bulk to reduce the delivery charges and where
companies are finding the optimum way of delivering items in the lowest cost, does it make
sense to send deliveries one product at a time?
Operations Club Edition 1 2019

Summer-ize: Summer Internship Experience

Winning Entry: The Amazon Way

Summer-ize: Journey from a low to a high, Operations is

about how you keep it together maintaining composure
through the various phases of the journey – Bhanu Paliwal

It all starts with the summer internship process in October 2018 and the entire atmosphere
around me. I wake up to the end of September 2018 with an end to an 8-year relationship; we
were like two products of a process which had different destinations. The stock market had
surprises in store for me, within the 1st week of October; my portfolio value had dropped by
more than a lakh, courtesy a single outlier, Infibeam. Grave instances having the same intensity
are common happenings in an Operations Manager’s schedule. A root cause analysis, 5 why’s,
whatever you do, you need to contemplate how you landed up in such a position. Things
couldn’t get worse when due to my years of work experience; I did not get a single GD shortlist
on the 1st GD break day. I remember posting in my section Whatsapp group to motivate others,
“When the going gets tough, the tough gets going”.

From that long night to converting a PPO with Amazon, this article is about my internship
experience and its learnings.

Amazon Experience

The on-boarding process for any company is an opportunity to market itself to its stakeholders,
its potential future employees, interns who would talk about it in the days to come and even
after returning to campus. So much for brand recall! It had to be grand. Irrespective of our intern
location, all of us were flown to Bangalore, accommodated in fancy hotels and given
personalized Amazon goodies. This just reaffirms the importance the company puts on hiring
the best and is an indication of what is expected out of the candidate in the coming 8 weeks. It
was also an opportunity for the HR to package the tedious itinerary in simple words.
Operations Club Edition 1 2019

At the start of week 2, I find myself as the only Amazon intern from a batch of about 100, sent to
Amazon’s fulfillment centre in Sonipat.

Any mountain trekker would tell you the importance of acclimatization, it being a slow and a
very integral aspect of the trek. Similarly, I was assigned to complete an associate experience
week(AEW) training, where I physically unloaded vendor parcels, checked and prepped products,
placed them in the inventory storage zone, picked them upon receiving customer order, packed
the product, loaded them in trucks and finally delivered more than 30 packages in Delhi, on the
back of a delivery associate’s bike. This entire exercise spread over a week was designed to
understand the difficulties and challenges that blue collar employees face. Irrespective of the
organization one is in, as a Manager you have to be aware of the ground level constraints and
based on that design our product or process.

Towards the end of Week 3, it was already time for the

mid review and there was so much to comprehend. It
was overwhelming, interacting with over 100 people,
where many of them were just starting at the shopfloor,
being explained more than 50 processes, seeing more
than 5 lakh products daily enter and exit the warehouse
and silently trying to understand the project given to me,
thinking, “How can I accomplish such a huge project in
such a short time frame.” These three weeks are very
important in terms of setting the first impression and
you have to heed caution during the mid-review, in what
you promise to deliver by the end of the internship.

The 2nd lag of the internship, the last 4 weeks requires

you to go all in, dedicate all the time to the project at
hand. Understand the problem, verify the solution you
have come up with your buddy, to check for its
feasibility, come up with a prototype, framework or a
working model. All this while you have access to
company resources; so much data that even excel calculations fall short. During this phase I
must have come up with 3-4 solutions, on which I spent 4-5 days (14 hours per day) each, only
to find out at the end that there were some legal, financial or manpower constraints due to
which I had to start afresh. When I confronted my manager about why Amazon did not state the
constraints in the beginning which would be very hard for an outsider to stumble upon, they
were of the view that it was important to understand all these constraints to come up with a fool
proof solution. I was given the last week to implement my idea at the warehouse level, to
observe any incremental benefit in any of the various KPI that Amazon religiously monitors. In
the final review I had to present and submit a 6-page document of my solution. This was one
presentation that I will never forget, apart from the obvious project, they were also interested in
my various ideas which I could not implement and why, and what more could I have done, had I
Operations Club Edition 1 2019

been given a month more. These were questions for which I was not prepared, but my diligently
working during the entire internship period helped me answer those questions.

It’s always Day1 at Amazon-Learnings

1. Balidan dena hoga

The intensity and sacrifices that you make, all depends on the time management skills of the
individual but on a personal level I missed my city meets, alumni meets and even slogged on
weekends despite being given a two day off. Staying alone in Sonipat I reached office at 8 and
left at 9 to accommodate my meals. It's a balance between your personal and professional
space. You can’t let either affect the other. This is to indicate that the task at hand is
humungous with the opportunity for immense learning.

2. Be Vigilant

Right from Day 1, being vigilant pays off. This has two fold benefits, one is recall value and it
gives you the benefit of giving constant feedback to better the process.

3. Take Ownership and Dive Deep

This is one advice which even Amazon would like to give you. You can’t expect things to be
served to you on a platter. As an Operations Manager you have to get your hands dirty to
understand the inputs to the process, the various processes and the final output that you desire.
All these have to be done keeping in mind the limited resources that you have. People who are
already working for the organization would only entertain your doubts, if they find them to be
legitimate and they derive value from it.

4. Digesting criticism

Receiving criticism was something I was never short of, it was a pill that I used to digest on a
regular basis. So much so that it even broke me at times. My reporting managers never shied
away from giving critical inputs and criticizing me. I held on to these critical inputs, which
pushed me to my limits. That was the norm all around. The same treatment was given for any
sub-optimal work. Even after having a background of speaking at multiple public forums, I was
asked whether I had any public speaking anxiety.

5. The most important of them all

This is one belief that you have to not only hang on to but live by it. There will be many instances
where you find the entire process overwhelming, smart colleagues who comprehend faster and
better than you. You have to realize this that the company selected you for a reason. They saw
something in you which the others did not have, either it be your fresh perspective or your
industry experience. One learning or advice that I would like to end on is: You are more
important than you think.
Operations Club Edition 1 2019

Why you should read ‘The Goal’?

The Goal by Eliyahu Goldratt is one of the

most recommended books for managers and

students. Even our professors here at Joka
recommend this. But then what is it that makes this
book worth your precious time? Let’s find out

If you could be taught a complex concept like the

Theory of Constraints in a business novel like format
that is easy to digest, you would wish for every
concept to be taught this way. When you read this
book, you are immersed in a journey along with the
protagonist to question things and arrive at
conclusions through your own reasoning. The story is
about Alex, a plant manager in a small town. He is
faced with the gripping challenge to improve the
performance of his plant by the end of the year, or else he will be facing a division shutdown.
Under these conditions, Alex comes across a guide in the form of Jonah. Jonah is the ideal
mentor who doesn’t enforce the solutions on Alex but merely shows him the directions and
makes him question things. The journey of discovery starts by finding out what ‘The Goal’ of a
company is. Not wishing to give out spoilers here but ‘The Goal’ mentioned is something our
Ethics professors would not like. Alex and his team (Bob from production, Lou from accounting
and Stacey from inventory control) redefine basic terms as : "Throughput is money coming in.
Inventory is the money currently inside the system. And operational expense is the money we
Operations Club Edition 1 2019

have to pay out to make throughput happen." Jonah helps them bust the myth of efficiency by
his statement, "A plant in which everyone is working all the time is very inefficient." In one of the
chapters, we find Alex learning about ‘dependent events’ and ‘statistical fluctuations’ by
observing kids in a hiking trip. By revisiting their production process, they also figure out how to
manage bottlenecks and ‘balance flow of product through the plant instead of balancing
capacity with demand’.

The Goal not only focuses on managing production process but addresses other challenges a
manager would face in real life. As managers we will have to maintain a work life balance, which
a considerable part of the book addresses. Additionally, while implementing new changes one
has to face resistance from existing management and prove to them that your proposal works.
The Goal beautifully depicts these struggles as well. The book is not only recommended for
operations enthusiasts but to anyone who wants to learn a bit or two about managing
companies. If you are one of those that do not enjoy reading much, a graphic illustration version
of the novel is also available. Do check it out and let us know your thoughts.
Operations Club Edition 1 2019

Understanding Operations

Bottleneck: Process with the lowest throughput in the system.

Continuous Review System: used for perishable goods and also fast moving goods

DPMO: Defects per million opportunities

Fill Rate: Portion of the demand that is satisfied from inventory

Heijunka: means “leveling.” When implemented correctly it helps organizations meet demand
while reducing wastes in production and interpersonal processes

Kaizen: Continuous improvement

Lead Time: The time needed to process a part through the facility. It depends on the definition
of facility. More than one process can be clubbed into one to find their lead time.

Newsvendor Model: It applies when a single period ordering decision has to be made with
unknown demand.

Periodic Review System: used for non-perishable and slow moving goods. Slow and fast
moving goods are determined by the frequency at which the goods are sold or exit from the
inventory.

Process: Any activity or group of activities that takes one or more inputs, modifies them or adds
value to produce one or more products(outputs).

Process Capacity: Capacity of the bottleneck

Reorder Point(R): Average daily demand(d) * Lead Time (L)

Throughput: The average output per unit time